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HQ 560014




June 17, 1997

CLA-2 RR:TC:SM 560014 MLR

CATEGORY: CLASSIFICATION

TARIFF NO.: 9802.00.80

Mr. James R. Cahill
Cahill Customs Consulting, Inc.
P.O. Box 821067
South Florida, FL 33082-1067

RE: Applicability of HTSUS subheading 9802.00.80; country of origin marking; t-shirts; sewing; cutting

Dear Mr. Cahill:

This is in reference to your letter of July 13, 1996, requesting a ruling on behalf of BBK International Co. Ltd. ("BBK"), concerning the applicability of subheading 9802.00.80, Harmonized Tariff Schedule of the United States (HTSUS), to certain t-shirts, and how they should be marked. In Headquarters Ruling Letter 959502 dated September 24, 1996, the country of origin of the subject t-shirts was determined.

FACTS:

It is stated that BBK plans to manufacture plain, white, unisex t-shirts of 100 percent cotton in three sizes in the Bahamas. It is stated that the raw materials used in making the t-shirts will either be of U.S. origin, Chinese origin, or a combination of U.S. and Chinese origin. The raw materials to be used in making the t-shirts will be 100 percent cotton tubular rolls for the body, sleeves, and reinforcement of the shoulders and back of the neck; 100 percent cotton thread; and 100 percent ribbed cotton rolls of one inch width for the neck trim. It is stated that the tubular cotton for the body will come in widths of either 21, 22, or 23 inches depending on whether medium, large, or extra large t-shirts are made. These widths are in tubular form and each will be cut to lengths of 30, 31, or 32 inches, respectively. The rolls of fabric to trim the neck opening will be ribbed and one inch wide. The shoulders and the back of the neck will be reinforced with an extra strip of fabric derived from the tubular fabric. In HRL 959502, it was held that the country of origin of the t-shirts will be the Bahamas.

ISSUES:

I. Whether the t-shirts assembled in the Bahamas using fabric imported from either the U.S. or China will qualify for the partial duty exemption available under subheading 9802.00.80, HTSUS, when imported into the U.S.

II. Whether the t-shirts may be marked "Assembled in Bahamas" for purposes of
19 U.S.C. 1304.

LAW AND ANALYSIS:

I. Subheading 9802.00.80

Subheading 9802.00.80, HTSUS, provides a partial duty exemption for:

[a]rticles ... assembled abroad in whole or in part of fabricated components, the product of the United States, which (a) were exported in condition ready for assembly without further fabrication, (b) have not lost their physical identity in such articles by change in form, shape or otherwise, and (c) have not been advanced in value or improved in condition abroad except by being assembled and except by operations incidental to the assembly process such as cleaning, lubricating and painting.

All three requirements of subheading 9802.00.80, HTSUS, must be satisfied before a component may receive a duty allowance. An article entered under this tariff provision is subject to duty upon the full cost or value of the imported assembled article, less the cost or value of the U.S. components assembled therein, upon compliance with the documentary requirements of section 10.24, Customs Regulations (19 CFR 10.24).

The rules of origin for textile and apparel products, 19 U.S.C. 3592(b)(4), codifying section 334(b)(4)(A) of the Uruguay Round Agreements Act, provides that:

[t]he value of a component that is cut to shape (but not to length, width, or both) in the United States from foreign fabric and exported to another country, territory, or insular possession for assembly into an article that is then returned to the United States --

(i) shall not be included in the dutiable value of such article.

The effect of 19 U.S.C. 3592(b)(4) is to preserve the tariff treatment afforded by subheading 9802.00.80, Harmonized Tariff Schedule of the United States (HTSUS), that otherwise would no longer be available under the section 334 origin rules since cutting fabric in the U.S. will no longer result in the cut fabric being considered a "product of" the U.S.

Section 10.25, Customs Regulations (19 CFR 10.25), implements 19 U.S.C. 3592(b)(4), and incorporates by reference the same operational, valuation, and documentation requirements applicable to goods entered under subheading 9802.00.80, HTSUS. Therefore, imported goods entitled to a duty allowance under 19 CFR 10.25 are to be entered under subheading 9802.00.8065, HTSUS, and, solely for purposes of calculating the duty allowance under this subheading, Customs will treat the textile components cut to shape in the U.S. from foreign fabric as if they were "U.S. fabricated components."

In this case, you state that you were told that if the fabric was cut in the U.S., it would be eligible for a duty allowance under 9802.00.80, HTSUS; however, you have not provided any details regarding whether or not the fabric will be cut to shape (not to length or width or both) in the U.S. The t-shirts will be made from tubular cotton for the body, rolls of fabric to trim the neck, tubular fabric to reinforce the shoulders and the back of the neck, and thread. For purposes of this ruling request, we are presuming that the operations performed in the Bahamas to the fabric components conform to the requirements and examples set forth in 19 CFR 10.16, namely the cut fabric components will be sewn together to form a finished t-shirt.

We find that if rolls of U.S.-origin fabric used to trim the neck opening are cut-to-length in the Bahamas or the U.S., the value of the trim may be subtracted from the full cost or value of the imported t-shirt in accordance with subheading 9802.00.80, HTSUS, as cutting-to-length is considered an operation incidental to the assembly process pursuant to 19 CFR 10.16(b)(6). However, please note that even if trim in continuous length from China is imported into the U.S. and cut-to-length, and subsequently exported to the Bahamas for assembly into t-shirts, the trim may not be excluded from the dutiable value of the t-shirt under subheading 9802.00.80, HTSUS, as the trim is not cut to shape in the U.S. as required by 19 U.S.C. 3592(b)(4).

We find that if tubular fabric of U.S. origin is cut into the shape of a t-shirt body and into the reinforcement pieces for the shoulders and back of the neck in the U.S. and the cut components are subsequently shipped to the Bahamas and assembled into a t-shirt, the t-shirts imported into the U.S. will be eligible for the duty allowance under subheading 9802.00.80, HTSUS. Additionally, if tubular fabric from China is imported into the U.S. and cut into the shape of a t-shirt body and reinforcement pieces, the t-shirts assembled with such fabric in the Bahamas will also be eligible for subheading 9802.00.80, HTSUS, treatment, as the Chinese fabric will have been cut to shape in the U.S. as required by 19 U.S.C. 3592(b)(4).

II. Country of Origin Marking

The marking statute, section 304, Tariff Act of 1930, as amended (19 U.S.C. 1304), provides that unless excepted, every article of foreign origin imported in the U.S. shall be marked in a conspicuous place as legibly, indelibly, and permanently as the nature of the article (or its container) will permit, in such a manner as to indicate to the ultimate purchaser in the U.S. the English name of the country of origin of the article.

For garments, the general rules set forth in 19 CFR 102.21(c)(1) - (5), which implement section 334 of the Uruguay Round Agreements Act will be used to determine the country of origin for country of origin marking purposes. As the country of origin of the t-shirts assembled in the Bahamas will be the Bahamas and the t-shirts are produced as a result of an assembly operation, as you have suggested, the t-shirts may be marked "Assembled in the Bahamas", pursuant to 19 CFR 134.43(e). However, the words "of U.S. materials" or "of U.S. components" may only be added if the t-shirts are produced with fabric that was woven in the U.S. If Chinese fabric is used, whether or not it is cut to shape in the U.S., the t-shirts may not include the wording "of U.S. materials" or "of U.S. components".

HOLDING:

If tubular fabric of U.S. or Chinese origin is cut into the shape of a t-shirt body and reinforcement pieces for the shoulders and back of the neck in the U.S., and the cut components are subsequently shipped to the Bahamas and assembled into a t-shirt, the t-shirts imported into the U.S. will be eligible for the duty allowance under subheading 9802.00.8065, HTSUS. Additionally, the cost or value of the U.S. origin trim fabric exported in continuous rolls may be subtracted from the full cost or value of the imported t-shirts under subheading 9802.00.80, HTSUS, whether or not the cutting to length is performed in the U.S. or the Bahamas, as cutting-to-length is considered an operation incidental to the assembly process pursuant to 19 CFR 10.16(b)(6).

Whether or not the t-shirts are eligible for subheading 9802.00.80, HTSUS, treatment, the t-shirts may be labeled "Assembled in the Bahamas", pursuant to 19 CFR 134.43(e). However, the words "of U.S. materials" or "of U.S. components" may only be used if the t-shirts are produced with fabric that was woven in the U.S. If fabric is used from China, whether or not it is cut to shape in the U.S., the t-shirts may not be marked with the additional phrase "of U.S. materials" or "of U.S. components".

A copy of this ruling letter should be attached to the entry documents filed at the time the goods are entered. If the documents have been filed without a copy, this ruling should be brought to the attention of the Customs officer handling the transaction.

Sincerely,

John Durant, Director

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